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Connelly Inc., a manufacturer of quality electric ice cream makers, has experienced a steady growth in sales over the past fe

Answer questions 1 through 5 Connelly Inc.

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Answer #1
Part-1
Operating Income = Contribution -Fixed Cost
( Contribution per Unit X Unit Sold)- Fixed Expense
=(100-54)*50500-515000
=$1808000
Part-2
Contribution Margin per Unit ( 100-54)=$46
Fixed Expense= $515000
BEP( Unit)= Fixed Expense/ Contribution Pe Unit
=$515000/$46= 11196 Unit
Part-3
Sales Target= 54400
Addition Fixed Selling Expense :- $226600
Revised Fixed Expense= $515000+226600
=$741600
Total Contribution = Contribution per Unit X Unit Sold
=(46X 54400)= $2502400
Operating Income = Contribution -Fixed Cost
=$2502400-$741600= $1760800
Part-4 (a)
New BEP( Unit)= Revised Fixed Expense/ Contribution Pe Unit
=$741600/$46= 16122 Unit
Part-4(b)
Contribution Income Statement
Sales (16122X $100) $1,612,200.00
Less:
Variable cost 16122X 54) $870,588.00
Contribution $741,612.00
Less: Fixed Cost $741,600.00
Net Operating Income $12.00
Difference is due to Rounded Off BEP Unit
Part-4©
Change in BEP= Revised BEP- Original BEP
16122-11196=4926
% change in BEP= 4926/11196=44%
Change in Fixed Expense= Revised Fixed Expense- Original Fixed Expense
=741600-515000= $226600
% change in Fixed Cost= = 226600/515000=30.56%%
Part-5
Revised Fixed Expense= 741600
Current operating income = 1808000
Contribution Margin Per Unit=$46
Total Contribution Required= 741600+1808000=$2549600
BEP= $2549600/$46=52033 Unit
52033 Unit need to be sold
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